Even Better Than the Real Thing

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Over the past two decades, videoconferencing has earned a bad reputation in the business world. Despite claims of new-and-improved technology from vendors, the act of conferencing via video hook-up has left a lot to be desired. Indeed, participating in a videoconference with the team in Tokyo is often a little like waking up in Son of Godzilla. The color isn’t right, motion appears robotic, and speech is unrelated to the actual flapping of lips.

Not surprisingly, more than a few corporate executives have been put off by the experience. Ken Jacobs, deputy chairman and head of Lazard in North America, is not a big fan. “[Older] videoconferencing systems are not effective, because they’re slow and jerky,” Jacobs says. “It makes interactive dialogue next to impossible.”

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This appears be changing. Recent advances in Internet telephony, including increases in network bandwidth, have greatly improved virtual conferencing. The latest incarnation of the service, known as telepresence, comes much closer to replicating the real thing. Unlike earlier approaches, telepresence uses fiber-optic networks, dramatically speeding up data-transfer rates.

What’s more, the conference rooms operate more like television studios, with state-of-the-art cameras; high-definition, wide-angle viewing screens; and advanced networking equipment. “These telepresence solutions are about bonding, teaming, and meeting face-to-face without getting on a plane,” says Ira Weinstein, an Atlanta-based senior analyst and partner at Wainhouse Research LLC. “You gain convenience without losing the human experience.”

Lazard built a telepresence studio in its New York office seven years ago. Jacobs says the conference room is now booked nearly 100 percent of the time. The firm’s management has been so impressed by the product that it has since added telepresence studios in offices in Italy, Chicago, and San Francisco. Says Jacobs: “We recouped our investment several times. We traveled less for internal meetings and still improved our internal communications.”

You Are There

Currently, several vendors market telepresence products (see “Room with a View” at the end of this article). The list includes tech heavyweights Hewlett-Packard and Cisco Systems, which is attempting to leverage its dominance in routers and switchers to carve out a niche in telepresence. Howard Lichtman, president and founder of The Human Productivity Lab, an independent consultancy focused on the telepresence industry, reckons that about 50 corporate customers have gone in for the technology so far. Those businesses have deployed 300 or so group telepresence systems globally (as opposed to 500,000 traditional IP videoconferencing systems in use right now). Small numbers, admittedly, but Lichtman predicts that as many as 25,000 telepresence studios could be built in the next decade.

Step into a telepresence studio and you may conclude that there is indeed hope for videoconferencing. A typical telepresence conference room contains a long table and several very large, high-definition flat-screen displays. Those wide screens add peripheral vision to the experience — important in creating a sense that distant colleagues are actually sitting across the table. “Your brain sees them as being in the same room,” explains Weinstein. “All of this is a way of tricking your mind into thinking you’re actually at an in-person meeting.”

Compression and decompression algorithms and dedicated high-bandwidth networks further the illusion. “With telepresence, there is no delay or packet loss,” says Lichtman. “The image stays like glass.”

Do I Have to Fly?

These improvements can dramatically reduce the need to send people to offsite meetings. Consider, for example, microprocessor manufacturer Advanced Micro Devices. About a year ago, management at the chipmaker heard about a telepresence partnership formed by film company Dreamworks and HP. AMD executives were so impressed by the product (dubbed Halo), they decided to purchase two studios, one for the company’s Austin, Texas, office and one for its headquarters in Sunnyvale, California.

The Halo studios have been a big hit with AMD’s senior managers. In fact, Linda Starr, corporate vice president of sales and marketing, says conferencing via telepresence has become “addictive.” Says Starr: “It’s the only personalized way to have an executive be on multiple continents on the same day dealing with critical issues.”

AMD has used the studios for everything from conducting performance reviews to haggling over contracts, and even for negotiating acquisitions. In fact, when AMD recently purchased Toronto-based graphics-chipset maker AMI, most of the negotiations were conducted over Halo, according to Starr. AMD’s COO is such a fan, Starr says, that he’ll ask, “Can we do it by Halo or do I have to fly?”

Studio System

Telepresence does have its drawbacks. For starters, it’s more evolutionary than revolutionary. As Weinstein notes, “Anyone who says this is not related to videoconferencing, at least in some way, is selling you something.” Thus, telepresence runs the risk of being supplanted by true technology breakthroughs. In fact, academics are hard at work on 3-D collaboration, in which off-site workers actually appear to be in the same room as colleagues (see “In the Year 2025,” CFO, March 2005).

What’s more, current telepresence offerings are not cheap. Companies interested in setting up a network must buy at least two studios to make the thing work. The rooms, which do not interface with other vendors’ studios, generally range in price from $100,000 to $400,000. Vendors also charge a hefty monthly fee, depending on the level of service and amount of network bandwidth required. A Halo studio, for example, costs $425,000 plus a monthly service charge that starts at $18,000. Says Lichtman: “It’s an expensive tool.”

Prices will likely come down as more players enter the market. Moreover, codec technology, which is used to compress video images and send them over a high-capacity network, is getting less expensive. So, too, is bandwidth, which makes up the lion’s share of the cost of telepresence systems.

And it’s hard to argue with any technology that keeps executives out of airports — modern-day transportation hubs that double as working models of purgatory. Before AMD deployed its telepresence studio, Starr flew between the company’s Sunnyvale and Austin offices at least once a week. That’s changed in a big way. “Now,” she says, “80 percent of what I used to do [in Sunnyvale] I do on Halo.”

Esther Shein writes often about business technology.

Room with a ViewTelepresence isn’t perfect, but it’s a big step up in conferencing technology. Costs for the systems vary widely, depending on the capabilities of the studios purchased.